[Federal Register Volume 59, Number 215 (Tuesday, November 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27619]
[[Page Unknown]]
[Federal Register: November 8, 1994]
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FEDERAL RESERVE SYSTEM
Saban, S.A., Marina Bay, Gibraltar, RNYC Holdings Limited, Marina
Bay, Gibraltar, and Republic New York Corporation, New York, New York;
Application to Engage in Nonbanking Activities
Saban, S.A., Marina Bay, Gibraltar, RNYC Holdings Limited, Marina
Bay, Gibralter, and Republic New York Corporation, New York, New York,
(together, Applicant), have applied pursuant to section 4(c)(8) of the
Bank Holding Company Act (12 U.S.C. 1843(c)(8)) (BHC Act) and Sec.
225.23(a)(3) of the Board's Regulation Y (12 CFR 225.23(a)(3)) to
engage de novo through a wholly owned subsidiary, Republic New York
Securities Corporation, New York, New York (Company), a futures
commission merchant (FCM) registered under the Commodity Exchange Act
(7 U.S.C. Sec. 1 et seq.), in executing and clearing, clearing without
executing, executing without clearing, purchasing and selling through
the use of omnibus trading accounts, and providing investment advisory
services with regard to futures and options on futures on financial and
nonfinancial commodities that previously have been approved by the
Board and to engage in FCM activities only through omnibus trading
accounts with regard to the following contracts that have not
previously been approved by the Board: Copper Grade A Futures and
Options on Copper Grade A Futures on the London Metal Exchange Limited.
Applicant proposes to conduct these activities throughout the United
States and the world.
Section 4(c)(8) of the BHC Act provides that a bank holding company
may, with Board approval, engage in any activity which the Board, after
due notice and opportunity for hearing, has determined (by order or
regulation) to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. This statutory
test requires that two separate tests be met for an activity to be
permissible for a bank holding company. First, the Board must determine
that the activity is, as a general matter, closely related to banking.
Second, the Board must find in a particular case that the performance
of the activity by the applicant bank holding company may reasonably be
expected to produce public benefits that outweigh possible adverse
effects.
A particular activity may be found to meet the ``closely related to
banking'' test if it is demonstrated that banks have generally provided
the proposed activity, that banks generally provide services that are
operationally or functionally similar to the proposed activity so as to
equip them particularly well to provide the proposed activity, or that
banks generally provide services that are so integrally related to the
proposed activity as to require their provision in a specialized form.
National Courier Ass'n v. Board of Governors, 516 F.2d 1229, 1237 (D.C.
Cir. 1975). In addition, the Board may consider any other basis that
may demonstrate that the activity has a reasonable or close
relationship to banking or managing or controlling banks. Board
Statement Regarding Regulation Y, 49 FR 806 (January 5, 1984).
Applicant maintains that the proposed activities are closely
related to banking or managing or controlling banks. Except as noted
below, the Board previously has approved acting as a futures commission
merchant in executing and clearing the proposed commodity contracts.
See Bank of Montreal, 79 Federal Reserve Bulletin 1049 (1993); J.P.
Morgan & Company Incorporated, 80 Federal Reserve Bulletin 151 (1994)
(Morgan); SR Letter No. 93027 (FIS)(May 21, 1993). The Board also has
approved providing a combination of advisory services regarding
nonfinancial commodity derivatives and acting as an FCM in the
execution and clearance of these derivatives. See Morgan; Caisse
Nationale de Credit Agricole S.A., 80 Federal Reserve Bulletin 552
(1994); Societe Generale, 80 Federal Reserve Bulletin 649 (1994).
The Board has not approved the trading of any contracts on the
London Metals Exchange Limited (LME). Applicant maintains that
providing FCM services with regard to these contracts is closely
related to banking because the Board has approved similar copper
contracts on exchanges that operate in a manner similar to the LME.
Applicant proposes to conduct the proposed activities in a manner
consistent with what the Board approved in the Societe Generale order
in that Company's customers would include managed commodity funds (or
commodity pools), but neither Applicant nor Company would sponsor, own,
or otherwise be affiliated with a commodity fund (or commodity pool) in
the United States without Federal Reserve approval.
In order to satisfy the proper incident to banking test, section
4(c)(8) of the BHC Act requires the Board to find that the performance
of the activities by Company can reasonably be expected to produce
benefits to the public, such as greater convenience, increased
competition, or gains in efficiency that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices.
Applicant believes that the proposed activities will benefit the public
by promoting competition. Applicant also believes that approval of this
application will allow Company to provide a wider range of services and
added convenience to its customers. Applicant believes that the
proposed activities will not result in any unsound banking practices or
other adverse effects.
In publishing the proposal for comment, the Board does not take a
position on issues raised by the proposal. Notice of the proposal is
published solely to seek the views of interested persons on the issues
presented by the application and does not represent a determination by
the Board that the proposal meets, or is likely to meet, the standards
of the BHC Act.
Any comments or requests for hearing should be submitted in writing
and received by William W. Wiles, Secretary, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551, not later than November
22, 1994. Any request for a hearing on this application must, as
required by Sec. 262.3(e) of the Board's Rules of Procedure (12 CFR
262.3(e)), be accompanied by a statement of the reasons why a written
presentation would not suffice in lieu of a hearing, identifying
specifically any questions of fact that are in dispute, summarizing the
evidence that would be presented at a hearing, and indicating how the
party commenting would be aggrieved by approval of the proposal.
This application may be inspected at the offices of the Board of
Governors or the Federal Reserve Bank of New York.
Board of Governors of the Federal Reserve System, November 2,
1994.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 94-27619; Filed 11-7-4; 8:45 am]
BILLING CODE 6210-01-F
